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Pocket and deposit it in your checking account

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Suppose that you take $50 in currency out of your pocket and deposit it in your checking account. If the required reserve ratio is 8%, what is the largest amount (in dollars) by which the money supply can increase as a result of your action? Include the $50 as part of the new money supply and assume the bank does not hold excess reserves.

Reference no: EM132192832

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